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This study examines the transition from a planned to a market economy that began in China in the late 1970s and which unleashed a series of changes: private enterprises and foreign investment have grown, the standard of living has improved, and corruption has increased. Another result of economic reform has been the creation of a new class - China's new business elite. The text analyzes the impact that this new class is having on China's politics, and particularly the extent to which the impact is favourable to democratization. The author conducted interviews with Chinese-born managers of foreign-sector firms and researched the activities of domestic-sector entrepreneurs. She concludes that, contrary to the assumptions of Westerners, these groups are not at the forefront of democratization or the emergence of a civil society. Rather, she argues, they are at the head of a new form of state-society relations in China, a hybrid of socialist corporatism and clientelism.